New Plan 2007 AFTAP

[Blinky the 3-eyed Fish]

If a new plan in 2007 has an EOY valuation date, how is its 2007 AFTAP determined? Obviously 12/31/06 numbers are non-existent and my understanding is that means 0%, not 100%. I feel I am missing something.

[AndyH]

You don't have one if the val date is 12/31/07. You need to do a 1/1/2008 val or live without one and do the notices and lump sum restrictions as I understand it. Remember, most of the dire consequences don't apply for the first five years of the plan.

But, the best answer is to do the 1/1/2008 AFTAP following the 2007 val. (And you may still be 0% unless the client funds by 3/31 or you are willing to certify based on a receivable)

Obviously some relief is still possible and is needed.

[Mike Preston]

I know this flies in the face of efficiency, but is there any restriction on doing an ad-hoc 1/1/08 valuation for the sole purpose of certifying but keeping your contribution valuation on an EOY cycle?

Its late and I'm tired so I apologize in advance for suggesting something that will increase the number of hours we have to spend dealing with a plan.

[Guest merlin]

Mike,

We were thinking of your approach, but other people have pointed out that the proposed 430 regulations require that the components of the AFTAP, i.e., the funding target and the asset value, be calculated as of the same date as the funding calculation. Norman Levinrad and Joan Gucciardi sadi it in the Q&A to their recent ASPPA webcast.

I like your answer better, but...

[Mike Preston]

But they are merely proposed regs. Surely it would rise to the level of a reasonable interpretation of the law if done for 1/1/2008, wouldn't it?

[ak2ary]

Of course notice 2008-21 says at the end that the IRS is considering similar guidance for later years for EOY vals. Since the IRS is considering it, does that make it reasonable?

[Blinky the 3-eyed Fish]

There's webcast with Jim Holland in a little over an hour. It's on funding, but I am going to pose this question and see what he thinks.

[ak2ary]

What'd he say?

[ak2ary]

He didnt like my idea

[Blinky the 3-eyed Fish]

He didn't answer me directly, so what you heard is what I heard.

What was your idea?

[ak2ary]

Of course notice 2008-21 says at the end that the IRS is considering similar guidance for later years for EOY vals. Since the IRS is considering it, does that make it reasonable?

[Blinky the 3-eyed Fish]

The comments I heard did not support his approval of that concept. I did directly ask him that question. Maybe they will address questions asked and print some tangible answers.

[ak2ary]

All the questions asked will be accumulated and answered on ASPPA website. Tangibility is another story

[Jim Norman]

He didnt like my idea

In hindsight, that was probably a question better left unasked.

[ak2ary]

if I knew he was gonna answer that way...I wouldnt have asked it

You asked a question we didnt get to, but I dont remember what it was

[Blinky the 3-eyed Fish]

I always forget who people's real names are. I am telling you about a webcast in which you are speaking. I feel silly.

[ak2ary]

I was talking to you as if you really had three eyes...I know how you feel

[Jim Norman]

if I knew he was gonna answer that way...I wouldnt have asked it

You asked a question we didnt get to, but I dont remember what it was

I asked about the applicable month when doing EOY vals.

Thanks.

[ak2ary]

Of course. how do I know you don't have three eyes

This could be completely politically incorrect

[ak2ary]

if I knew he was gonna answer that way...I wouldnt have asked it

You asked a question we didnt get to, but I dont remember what it was

I asked about the applicable month when doing EOY vals.

Thanks.

Apparently this computer does not have Powerpoint installed so I cannot get to slide 48.

But the difference between beginning and end of year vals in choosing the segmented yield curve set to use is that the rates have to be for the month containing the val date or any of the 4 prior months,.

The slide points out, however, in theory the segment you use is based on the time from the benefit payment to the first day of the plan year. So in theory a payment to be made 19 years and 2 days from the val date in an end of year val would be made more than 20 years from the first day of the plan year and use the 3rd segment rate for discounting.

I hoped that Jim would confirm that either this wasnt the case or that EOY guidance for 2008 would eventually fix this. He didnt confirm either, but I hope eventual guidance will confirm that it is time from the val date not time from BOY that determines whether to use the first second or third segment

[Jim Norman]

I hoped that Jim would confirm that either this wasnt the case or that EOY guidance for 2008 would eventually fix this. He didnt confirm either, but I hope eventual guidance will confirm that it is time from the val date not time from BOY that determines whether to use the first second or third segment

Thanks for the explanation, I will add my hope to yours. Nice to meet you via the message board here and thank you for the webcast and all of your sessions at ASPPA annual.

[ak2ary]

Thanks

Jim may also have input on this when we do the written answers to session questions